How is pto determined?

If you know that you accumulate five hours of PTO time per pay period, you can easily calculate your PTO by multiplying five by six, which equals 30 hours of PTO. To determine how many days of PTO that is, you can divide that number by eight.

In this article, the experts at Sling introduce you to PTO, PTO accrual, and the calculations you’ll need to figure it all out.

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PTO is the abbreviation for “paid time off” (or, sometimes, “personal time off”).

Paid time off is a benefit given by employers to employees that provides a bank of hours from which the employee can withdraw time off for sick days, vacation days, and personal days as the need arises.

To understand PTO accrual, we need to define that second term.

Accrual is:

The accumulation or increase of something over time.

Putting the two ideas together, we get a clear and concise definition of PTO accrual:

The accumulation or increase of paid time off hours over time.

We’ll examine how this works in more detail in the section How To Calculate PTO. But first, we’ll discuss three key questions that every manager and business owner should answer.

PTO is a fringe benefit that some businesses offer as a way to recruit and retain the best employees. But is it right for your business?

When examining the issue of paid time off, it’s vital to take into account one important fact: PTO is not mandatory. There’s no law that says you have to offer this benefit. It’s entirely up to you.

Some businesses don’t offer PTO at all, while other businesses offer it to their full-time employees but not their part-time employees. It all depends on the unique needs of your organization.

Examine your business’s budget, consider all the angles, and then decide whether or not to offer PTO as a perk.

For more information on PTO, take a few moments to read our helpful article, Paid Time Off: The Complete Business Owner & Managers Guide.

The first step in implementing a paid-time-off policy is to decide how much time you will offer. Remember, PTO is entirely optional, so you decide on the number of hours that works for your business.

Common PTO offerings include:

(Note: These numbers assume an eight-hour workday. Your policy may differ.)

Again, you can choose any number you want — or none at all. It all depends on what makes the most sense for your business.

Another crucial factor to consider when setting up a paid-time-off program is the roll-over policy you’ll apply to any leftover hours.

Some businesses make it mandatory that all employees use their PTO in one calendar year, eliminating the need for a roll-over policy. Any hours remaining at the end of December disappear at the beginning of January.

Other businesses allow their employees to transfer a certain amount of PTO hours from one year to the next.

For example, if you offer 40 hours of PTO per year and an employee only uses 35, they can add those five unused hours to the next year’s total (for a grand total of 45 hours).

Whatever PTO numbers and roll-over policy you choose, be sure to provide all the details in your employee handbook.

Now that you understand the basics of PTO accrual, we’ll turn our attention to the calculations you’ll need to make your policy work.

There are many different ways to calculate PTO accrual — from the simple to the complex. We’ll show you one from either end of the spectrum.

This is the simplest method for calculating PTO and is ideal for long-time employees and full-time employees who have already worked a full year.

In January, each employee starts with a specific number of PTO hours. When an employee takes time away from work, you subtract the time off from their yearly PTO bank.

Here’s an example of this PTO calculation:

If you don’t want your employees to wait until the start of a new year to begin accruing paid time off, you can implement the following method.

This method is more complicated than the yearly PTO bank, but it more accurately reflects the amount of work the employee puts into your business — especially for part-time team members.

For this example, we’ll calculate PTO accrual for a part-time employee using the same metrics you’d use for a full-time employee:

With those numbers in mind, here’s how to calculate PTO accrual based on hours worked:

80 PTO hours / 2000 total hours = 0.04

4 hours worked X 0.04 = 0.16

Continue calculating their PTO accrual for every hour they work.

You can also use this method to calculate PTO for a full-time employee who works less than eight hours a day on certain days.

Just use the same two constants — 80 hours PTO and 2000 hours worked per year — and the employee’s hours worked to figure out how much time off they’ve earned.

Daily PTO accrual is useful for all employees — full-timers and part-timers alike — but it only works if they are on the clock for full eight-hour shifts.

Since the eight-hour shift is the basis for your calculations, if a part-time employee works anything less, they won’t receive the PTO like full-time employees.

Below we’ll talk about how to determine a daily PTO accrual rate. Again, you’ll base all your numbers on what your full-time employees receive, so the numbers might be a bit different from the ones we use here.

That said, the equations remain the same.

In this example, we’re going to use the day (a full eight-hour shift) as the foundation of the calculation.

So, as before, we assume the following standards:

To figure out the amount of PTO an employee will accrue for every day worked, plug those numbers into the following equation:

Daily PTO Rate = Annual PTO Hours / Annual Days WorkedDaily PTO Rate = 80 / 250Daily PTO Rate = 0.32

For every day an employee works, they will receive 0.32 hours of PTO.

If a part-time employee works an eight-hour shift Monday, Wednesday, and Friday, along with a six-hour shift on Thursday, their PTO accrual is as follows:

Employee PTO = Number Of Full Days Worked x Daily PTO RateEmployee PTO = 3 x 0.32Employee PTO = 0.96

In this example, only the full days count, so the six-hour shift is discarded.

Hourly and daily PTO accrual calculations work for both full-time and part-time employees. Even though the daily rate discounts shorter shifts, the part-time employee does receive a portion of the benefit.

The same can’t be said for the weekly calculation. Any accrual method that deals with time periods larger than the day is biased toward full-time employees.

If you choose to use this calculation for your part-time employees, you’ll need to introduce more elaborate tracking and record-keeping that may make it less productive.

That said, once an employee accumulates a week’s worth of hours (e.g., 40), the math is very similar to the daily calculation.

Again, we’ll assume the following metrics:

Weekly PTO Rate = Annual PTO Hours / Total Weeks Worked AnnuallyWeekly PTO Rate = 80 / 50Weekly PTO Rate = 1.6 hours

As an example of this method, imagine that an employee asks for a morning off in mid-February. Do they have enough PTO (assuming they don’t have rollover from the previous year)? You can use the weekly accrual calculation to find out.

They’ve worked six weeks so far this year at a weekly PTO rate of 1.6 hours per week. Here’s the math:

PTO Accrued So Far = 6 Weeks Worked x 1.6 Hours Per WeekPTO Accrued So Far = 9.6 hours

The employee has more than a full day (eight hours) of PTO saved up, so granting them the morning (four hours) off is possible from a PTO perspective.

Many businesses pay their employees every two weeks, so basing your PTO accrual on that time period makes great sense.

One of the benefits of the every-two-week calculation is that your employees will always see the same amount on their paycheck.

As with the previous methods, to figure out the accrual rate, take the total amount of PTO you give divided by the number of two-week periods that employees work in a year.

Your numbers may vary — you may give less total PTO and your employees may work more total weeks annually — but for this example, we’ll assume the same numbers we’ve been using throughout this article:

Two-Week PTO Accrual Rate = 80 Hours / 25 Two-Week PeriodsTwo-Week PTO Accrual Rate = 3.2 hours

Assuming an employee works 40 hours both weeks, they’ll receive 3.2 hours of PTO for that pay period.

To illustrate how you can use this method if an employee asks for time off, consider the following example.

An employee asks for a week off at the end of June. Do they have enough PTO (assuming no rollover from the previous year)? Look back at your records and see that you have issued 12 paychecks so far this year (one every two weeks for six months).

Multiply those 12 pay periods by the accrual rate of 3.2 hours and find that the employee has earned 38.4 hours of PTO.

They haven’t accumulated the full 40 hours necessary to take the whole 40-hour week off, but since they’re close, you might credit them the 1.6 hours as a gesture of goodwill.

During the next two-week pay period, then, they would only receive 1.6 hours of PTO instead of the regular 3.2.

Your to-do list is long and calculating PTO accrual can eat up a big chunk of your day. To make your work life easier, incorporate Sling — the most multifaceted employee scheduling platform available — into your workflow.

With Sling’s employee scheduling features and management tools, you can quickly handle all of your business needs and leverage your time effectively.

Take care of employee scheduling, monitor your labor spend, and communicate with employees all in one platform.

Whether you’re managing a team of 5 or 500, Sling will save you valuable hours. With just a few clicks, you can approve PTO requests, find coverage for shifts, and seamlessly track labor costs while staying on budget.

All of Sling’s cloud-based features — from schedule creation to time clock to payroll calculations — make it easy for you to create the best schedule possible, distribute it with ease, make changes, and juggle time-off requests.

Sling even provides suggestions and warnings when you’ve double-booked a team member or created a conflict in another part of your schedule.

All of this makes Sling the best shift planning software for simplifying your business’s work schedule, tracking PTO accrual, and giving you more time to focus on guiding your business to success.

For more free resources to help you manage your business better, organize and schedule your team, and track and calculate labor costs, visit GetSling.com today.

This content is for informational purposes and is not intended as legal, tax, HR, or any other professional advice. Please contact an attorney or other professional for specific advice.

Paid time off is exactly what it sounds like, but how exactly does it play out in our businesses?

While we may see paid time off as a fundamental part of working life, it’s actually not as cut and dry as it might seem.

Paid time off is not required by law for many businesses, but it’s an integral part of company culture.

Let’s take a look at your obligations when it comes to paid time off, the benefits and drawbacks, and ways you can implement your paid time off policies more effectively.

Paid time off, commonly referred to as PTO, is a time when an employee receives compensation despite not working. While it may surprise some people, paid time off is not a guaranteed right for the majority of workers in the US and it instead relies on individual businesses to decide their own policies.

In the US, it’s generally up to employers to decide whether they want to offer paid time off, and the policies they use to do this. This can be an important decision for managers, as there are some distinct benefits and drawbacks to PTO.

76% of American workers have access to paid holidays, so the majority of businesses see the benefits in offering paid time off, but they each implement it in their own way.

As legislation surrounding PTO is thin, it means businesses need to think hard about how they want to approach this issue. Any policy has to benefit both the business and its employees, but often paid time off can end up being a hassle for both.

At its most basic level, employment is about getting paid to work. Smart businesses don’t pay people for their time, they pay them for their output. Humans have a limited attention span, and they have limited energy reserves. If we don’t replenish those energy reserves from time to time, then our output can drop drastically.

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Sure, there’s always that one person that lives for work and never takes holidays — but does this ultimately enable them to do their best work?

More time spent working doesn’t necessarily mean you get more work done. In fact, regular breaks (both short breaks during the day, and longer breaks throughout the year) make people more efficient in the long run.

If your business doesn’t offer PTO, then your employees have less incentive to take the time they need to refresh themselves and maximize their output. Anything you can do to improve your offering benefits your business.

A good paid time off policy can lead to improved performance, better employee morale, and fewer accidents and errors.

Paid time off is largely decided by employers, which means there are different ways it can be enacted. Every business is unique, which means the way they manage paid time off is going to be different.

It’s about balancing the needs of your business with the needs of your employees and scheduling your workforce to get maximum efficiency.

If your paid time off policies isn’t achieving this balance, then it’s time to look at new ways to use PTO to benefit your business.

Paid time off is often broken down into two categories: traditional PTO and unlimited (discretionary) PTO.

Traditional paid time off is probably the system we’re most likely to think of when thinking of PTO. Employees are given a set number of PTO days or hours, and each hour they use comes out of that bank. For example, your business might assign employees 80 paid time off hours per calendar year.

Within traditional PTO, there are two common ways to assign PTO hours. The first is accrual, where employees earn PTO for each day or hour they work. The other is a bank, where employees are given a set number of hours for a certain time period.

Up until recently, virtually all businesses would have a traditional PTO system. In recent years though, businesses have been thinking hard about how they can benefit more from paid time off policies, and unlimited time off has become more and more popular (LinkedIn, Netflix, Oracle, and many others offer this, including ZoomShift. Yes, we practice what you preach.

With unlimited PTO, Employees have no limit on the number of paid time off hours they receive, but the time has to be OK’d by a manager. While there is still oversight over when paid time off is taken, this method empowers your employees by giving them the responsibility of running their schedule so that they get the most out of their performance.

Along with employee scheduling, ZoomShift can help you manage your paid time off in both traditional and unlimited PTO policies. It comes without any additional cost.

PTO can be used as the employee sees fit. Paid time off policies is a recognition that employees have busy lives outside of work, and sometimes, they need some time off to tend to certain things.

To have a prosperous, efficient workforce, it’s beneficial for your employees to have the time they need to take care of their home life. PTO allows workers to do this by giving them control over how they spend their time.

The variety of different types of paid time off can make your policies much more complicated. This is something you need to think about and decide where your company stands in each area.

Paid time off is an important part of the business that has big repercussions for both management and employees. Complicated policies that aren’t well-articulated and calculated properly cause needless hassle, so it’s important to have a clear idea of your obligations in the following areas.

What are your legal obligations relating to paid time off?

For example, not every state requires employers to pay an employee’s unused vacation time, whether they leave on their own accord or are terminated from their position. However, some states, such as California, are legally required to pay out unused vacation time.

Each locality has its own framework you’ve got to work with, but it’s up to you how you develop your policies beyond that.

This is one of the first questions you will have to answer. How do you want to assign paid time off?

Will you give everyone a set amount? Will employees earn time off based on the hours they work? Will you go with the unlimited option?

Each option will come with its benefits and drawbacks, so think about which option best matches your needs.

What happens if an employee doesn’t use their paid time off?

You offer paid time off because you want your employees to take a break, but what happens if they don’t use it? Do you let it roll over to next year? Do you pay it off? Do they lose it?

These are sensitive questions you will have to answer.

Another policy you have to decide on is what happens to unused paid time off when someone finishes their employment. Do you pay it off, or do they lose it?

It might seem like a small detail, but it’s something you will need to think about with your paid time off policies.

Depending on your business, there might be certain dates where you just can’t afford to have employees off work. If this is the case, then you may have some blackout dates where PTO isn’t permitted.

This works well in a seasonal business, but remember, the more you restrict the times when employees can take PTO, the more likely you are to have multiple people off at the same time.

Paid time off is a concept that’s developed over time. At first, the thought of businesses paying people not to work must have been quite alien to people, but over time, we’ve started to see the benefits of these policies.

The right PTO policies can have a big impact on many different areas of a business, but it’s not without its challenges.

Pros

Cons

One of the most important aspects of PTO is that managers and employees can easily keep track of how many paid days they have available. The easier you can make this, the more effective your policies are likely to be.

How is PTO calculated, will depend on your PTO policies. Here we discuss all the possible ways to calculate PTO.

The annual PTO bank calculation is perhaps the most simple.

Decide how many hours of paid time off employees start the year with, and subtract the hours as they use them.

Say Kelsey starts the year with 80 hours and decides to take a week of vacation. Simply subtract 40 (5 days times 8 hours) from the original 80 hours, and she’s left with 40 hours of PTO.

Wondering how to calculate PTO accrual. Well, this method assigns PTO based on the number of hours worked.

Kelsey works a full-time schedule of 40 hours per week, and she works 50 weeks per year. Taking the 50 weeks times her 40-hour workweek, you get a total of 2,000 total hours worked per year.

If Kelsey’s company offers 80 hours of PTO a year, then the calculation will look like this.

80 Hours of PTO ÷ 2,000 total work hours = 0.04 PTO hours accrued per hour worked.

For every hour Kelsey works, she will receive 0.04 hours of paid time off. Many businesses see this as the fairest way to assign PTO.

Daily PTO accrual is a simple method for employees who work regular 8-hour days.

Your company offers 80-hours of PTO, and Kelsey is expected to work 250 days a year (5 days a week times 50 weeks). 80 hours of PTO divided by 250 days means that Kelsey earns 0.32 PTO hours per day she works.

This calculation gives your employees a clear idea of how they earn PTO, and “how much their time is worth.”

Weekly PTO accrual is very similar to the daily PTO calculation.

Instead of breaking the time down into days, you’re simply dividing your total annual number of PTO hours by the number of weeks you work. So, in Kelsey’s case, this will be 80 PTO hours divided by 50 weeks of work — 1.6 hours of PTO earned each week.

Again, this calculation works better for employees on full-time schedules.

With unlimited PTO, there’s no need to keep track of how much PTO employees are taking, so there are no calculations. However, in such a flexible system, it’s vitally important that you have a good employee scheduling system in place so that you can keep track of when everyone is working.

This system can be quite hectic if you’re not properly organized, so it’s important you have good systems in place to help you manage your unlimited PTO.

Whether you choose a traditional PTO method or unlimited, the most important thing is how you implement it. You may have the best intentions with your PTO policies, but if they’re not enacted properly, then you’re going to struggle to see the benefits.

Scheduling is vitally important- you need to have a clear idea of who is working when. You can’t have everybody off work at the same time, so your ability to keep track of when people are taking PTO is essential.

You also want your PTO policies to be fair and give people the rest they need. You can’t do this without having a good way of tracking PTO. It needs to be quick and easy for employees to see how much time they have left, and for you to be able to approve hours.

Without the right systems, this is going to be extremely challenging and can add a huge amount of extra work for your HR team.

Paid time off is important for any business, but it’s also got to be efficient. If you’re using outdated methods to keep track of PTO, then you’re not likely to see its full benefits of it.

ZoomShift makes PTO easy by bringing everything together in one place.

Not only can you create efficient schedules in minutes using intuitive templates, track employee timesheets and attendance but you can also manage PTO directly through the system. This allows management and employees to see exactly how much PTO they have available, making it simple to plan ahead.

This helps companies that switch to ZoomShift to organize their PTO, become more productive, and communicate better — exactly what you need for a successful PTO policy.

Choosing your business’s paid time off policy is an important step.